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(COMMON DREAMS) Destroying African Agriculture

Destroying African Agriculture
by Walden Bello
Monday, August 18, 2008
Published on Wednesday, June 4, 2008 by Foreign Policy in Focus

Biofuel production is certainly one of the culprits in the current global food crisis. But while the diversion of corn from food to biofuel feedstock has been a factor in food prices shooting up, the more primordial problem has been the conversion of economies that are largely food-self-sufficient into chronic food importers. Here the World Bank, International Monetary Fund (IMF), and the World Trade Organization (WTO) figure as much more important villains.

Whether in Latin America, Asia, or Africa, the story has been the same: the destabilization of peasant producers by a one-two punch of IMF-World Bank structural adjustment programs that gutted government investment in the countryside followed by the massive influx of subsidized U.S. and European Union agricultural imports after the WTO’s Agreement on Agriculture pried open markets.

African agriculture is a case study of how doctrinaire economics serving corporate interests can destroy a whole continent’s productive base.

From Exporter to Importer

At the time of decolonization in the 1960s, Africa was not just self-sufficient in food but was actually a net food exporter, its exports averaging 1.3 million tons a year between 1966-70. Today, the continent imports 25% of its food, with almost every country being a net food importer. Hunger and famine have become recurrent phenomena, with the last three years alone seeing food emergencies break out in the Horn of Africa, the Sahel, Southern Africa, and Central Africa.

Agriculture is in deep crisis, and the causes are many, including civil wars and the spread of HIV-AIDS. However, a very important part of the explanation was the phasing out of government controls and support mechanisms under the structural adjustment programs to which most African countries were subjected as the price for getting IMF and World Bank assistance to service their external debt.

Instead of triggering a virtuous spiral of growth and prosperity, structural adjustment saddled Africa with low investment, increased unemployment, reduced social spending, reduced consumption, and low output, all combining to create a vicious cycle of stagnation and decline.

Lifting price controls on fertilizers while simultaneously cutting back on agricultural credit systems simply led to reduced applications, lower yields, and lower investment. One would have expected the non-economist to predict this outcome, which was screened out by the Bank and Fund’s free-market paradigm. Moreover, reality refused to conform to the doctrinal expectation that the withdrawal of the state would pave the way for the market and private sector to dynamize agriculture. Instead, the private sector believed that reducing state expenditures created more risk and failed to step into the breach. In country after country, the predictions of neoliberal doctrine yielded precisely the opposite: the departure of the state “crowded out” rather than “crowded in” private investment. In those instances where private traders did come in to replace the state, an Oxfam report noted, “they have sometimes done so on highly unfavorable terms for poor farmers,” leaving “farmers more food insecure, and governments reliant on unpredictable aid flows.” The usually pro-private sector Economist agreed, admitting that “many of the private firms brought in to replace state researchers turned out to be rent-seeking monopolists.”

What support the government was allowed to muster was channeled by the Bank to export agriculture - to generate the foreign exchange earnings that the state needed to service its debt to the Bank and the Fund. But, as in Ethiopia during the famine of the early 1980s, this led to the dedication of good land to export crops, with food crops forced into more and more unsuitable soil, thus exacerbating food insecurity. Moreover, the Bank’s encouraging several economies undergoing adjustment to focus on export production of the same crops simultaneously often led to overproduction that then triggered a price collapse in international markets. For instance, the very success of Ghana’s program to expand cocoa production triggered a 48% drop in the international price of cocoa between 1986 and 1989, threatening, as one account put it, “to increase the vulnerability of the entire economy to the vagaries of the cocoa market.” 1 In 2002-2003, a collapse in coffee prices contributed to another food emergency in Ethiopia.

As in many other regions, structural adjustment in Africa was not simply underinvestment but state divestment. But there was one major difference. In Latin America and Asia, the Bank and Fund confined themselves for the most part to macromanagement, or supervising the dismantling of the state’s economic role from above. These institutions left the dirty details of implementation to the state bureaucracies. In Africa, where they dealt with much weaker governments, the Bank and Fund micromanaged such decisions as how fast subsidies should be phased out, how many civil servants had to be fired, or even, as in the case of Malawi, how much of the country’s grain reserve should be sold and to whom. In other words, Bank and IMF resident proconsuls reached into the very innards of the state’s involvement in the agricultural economy to rip it up.

The Role of Trade

Compounding the negative impact of adjustment were unfair trade practices on the part of the EU and the United States. Trade liberalization allowed low-priced subsidized EU beef to enter and drive many West African and South African cattle raisers to ruin. With their subsidies legitimized by the WTO’s Agreement on Agriculture, U.S. cotton growers offloaded their cotton on world markets at 20-55% of the cost of production, bankrupting West African and Central African cotton farmers in the process.2

These dismal outcomes were not accidental. As then-U.S. Agriculture Secretary John Block put it at the start of the Uruguay Round of trade negotiations in 1986, “the idea that developing countries should feed themselves is an anachronism from a bygone era. They could better ensure their food security by relying on U.S. agricultural products, which are available, in most cases at lower cost.”3

What Block did not say was that the lower cost of U.S. products stemmed from subsidies that were becoming more massive each year, despite the fact that the WTO was supposed to phase out all forms of subsidy. From $367 billion in 1995, the first year of the WTO, the total amount of agricultural subsidies provided by developed country governments rose to $388 billion in 2004. Subsidies now account for 40% of the value of agricultural production in the European Union (EU) and 25% in the United States.

The social consequences of structural adjustment cum agricultural dumping were predictable. According to Oxfam, the number of Africans living on less than a dollar a day more than doubled to 313 million people between 1981 and 2001 - or 46% of the whole continent. The role of structural adjustment in creating poverty, as well as severely weakening the continent’s agricultural base and consolidating import dependency, was hard to deny. As the World Bank’s chief economist for Africa admitted, “We did not think that the human costs of these programs could be so great, and the economic gains would be so slow in coming.”4

That was, however, a rare moment of candor. What was especially disturbing was that, as Oxford University political economist Ngaire Woods pointed out, the “seeming blindness of the Fund and Bank to the failure of their approach to sub-Saharan Africa persisted even as the studies of the IMF and the World Bank themselves failed to elicit positive investment effects.”5

The Case of Malawi

This stubbornness led to tragedy in Malawi.

It was a tragedy preceded by success. In 1998 and 1999, the government initiated a program to give each smallholder family a “starter pack” of free fertilizers and seeds. This followed several years of successful experimentation in which the packs were provided only to the poorest families. The result was a national surplus of corn. What came after, however, is a story that will be enshrined as a classic case study in a future book on the 10 greatest blunders of neoliberal economics.

The World Bank and other aid donors forced the drastic scaling down and eventual scrapping of the program, arguing that the subsidy distorted trade. Without the free packs, food output plummeted. In the meantime, the IMF insisted that the government sell off a large portion of its strategic grain reserves to enable the food reserve agency to settle its commercial debts. The government complied. When the crisis in food production turned into a famine in 2001-2002, there were hardly any reserves left to rush to the countryside. About 1,500 people perished. The IMF, however, was unrepentant; in fact, it suspended its disbursements on an adjustment program with the government on the grounds that “the parastatal sector will continue to pose risks to the successful implementation of the 2002/03 budget. Government interventions in the food and other agricultural markets…crowd out more productive spending.”

When an even worse food crisis developed in 2005, the government finally had enough of the Bank and IMF’s institutionalized stupidity. A new president reintroduced the fertilizer subsidy program, enabling two million households to buy fertilizer at a third of the retail price and seeds at a discount. The results: bumper harvests for two years in a row, a surplus of one million tons of maize, and the country transformed into a supplier of corn to other countries in Southern Africa.

But the World Bank, like its sister agency, still stubbornly clung to the discredited doctrine. As the Bank’s country director told the Toronto Globe and Mail, “All those farmers who begged, borrowed, and stole to buy extra fertilizer last year are now looking at that decision and rethinking it. The lower the maize price, the better for food security but worse for market development.”

Fleeing Failure

Malawi’s defiance of the World Bank would probably have been an act of heroic but futile resistance a decade ago. The environment is different today. Owing to the absence of any clear case of success, structural adjustment has been widely discredited throughout Africa. Even some donor governments that once subscribed to it have distanced themselves from the Bank, the most prominent case being the official British aid agency that co-funded the latest subsidized fertilizer program in Malawi. Perhaps the motivation of these institutions is to prevent the further erosion of their diminishing influence in the continent through association with a failed approach and unpopular institutions. At the same time, they are certainly aware that Chinese aid is emerging as an alternative to the conditionalities of the World Bank, IMF, and Western government aid programs.

Beyond Africa, even former supporters of adjustment, like the International Food Policy Research Institute (IFPRI) in Washington and the rabidly neoliberal Economist acknowledged that the state’s abdication from agriculture was a mistake. In a recent commentary on the rise of food prices, for instance, IFPRI asserted that “rural investments have been sorely neglected in recent decades,” and says that it is time for “developing country governments [to] increase their medium- and long-term investments in agricultural research and extension, rural infrastructure, and market access for small farmers.” At the same time, the Bank and IMF’s espousal of free trade came under attack from the heart of the economics establishment itself, with a panel of luminaries headed by Princeton’s Angus Deaton accusing the Bank’s research department of being biased and “selective” in its research and presentation of data. As the old saying goes, success has a thousand parents and failure is an orphan.

Unable to deny the obvious, the Bank has finally acknowledged that the whole structural adjustment enterprise was a mistake, though it smuggled this concession into the middle of the 2008 World Development Report, perhaps in the hope that it would not attract too much attention. Nevertheless, it was a damning admission:

Structural adjustment in the 1980’s dismantled the elaborate system of public agencies that provided farmers with access to land, credit, insurance inputs, and cooperative organization. The expectation was that removing the state would free the market for private actors to take over these functions-reducing their costs, improving their quality, and eliminating their regressive bias. Too often, that didn’t happen. In some places, the state’s withdrawal was tentative at best, limiting private entry. Elsewhere, the private sector emerged only slowly and partially-mainly serving commercial farmers but leaving smallholders exposed to extensive market failures, high transaction costs and risks, and service gaps. Incomplete markets and institutional gaps impose huge costs in forgone growth and welfare losses for smallholders, threatening their competitiveness and, in many cases, their survival.

In sum, biofuel production did not create but only exacerbated the global food crisis. The crisis had been building up for years, as policies promoted by the World Bank, IMF, and WTO systematically discouraged food self-sufficiency and encouraged food importation by destroying the local productive base of smallholder agriculture. Throughout Africa and the global South, these institutions and the policies they promoted are today thoroughly discredited. But whether the damage they have caused can be undone in time to avert more catastrophic consequences than we are now experiencing remains to be seen.

Walden Bello is a senior analyst at Focus on the Global South, a program of Chulalongkorn University’s Social Research Institute, and a columnist for Foreign Policy In Focus (www.fpif.org).

Sources

1. Charles Abugre, “Behind Crowded Shelves: as Assessment of Ghana’s Structural Adjustment Experiences, 1983-1991,” (San Francisco: food First, 1993), p. 87.

2. “Trade Talks Round Going Nowhere sans Progress in Farm Reform,” Business World (Phil), Sept. 8, 2003, p. 15

3. Quoted in “Cakes and Caviar: the Dunkel Draft and Third World Agriculture,” Ecologist, Vol. 23, No. 6 (Nov-Dec 1993), p. 220

4. Morris Miller, Debt and the Environment: Converging Crisis (New York: UN, 1991), p. 70.

5. Ngaire Woods, The Globalizers: the IMF, the World Bank, and their Borrowers (Thaca: Cornell University Press, 2006), p. 158.

Copyright © 2008, Institute for Policy Studies




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18 Comments so far
lexington June 4th, 2008 11:47 am
Re read the following
At the time of decolonization in the 1960s, Africa was not just self-sufficient in food but was actually a net food exporter, its exports averaging 1.3 million tons a year between 1966-70.

Today, the continent imports 25% of its food, with almost every country being a net food importer.

In Patel’s book ‘Stuffed and Starved’ he points out that India had more recorded famines during the British Raj than in the preceding 2 centuries.

Clearly control of a nation’s food by forces other than by farmers and the government is not a ‘good thing’

good2go June 4th, 2008 12:27 pm
“African agriculture is a case study of how doctrinaire economics serving corporate interests can destroy a whole continent’s productive base.”
Rather the bottom line here. Check out this piece as well.

http://news.bbc.co.uk/2/hi/science/nature/7430996.stm

Gonzalo Ovieto here gets to the root of the problem, echoing much of what is said here. Notice many of Bello’s sources are old pieces, meaning things are probably even worse now.

The sinking dollar, the rising cost of energy, and other problems have exacerbated the food crisis much more than biofuels could expect to. 4% of grains worldwide are used for biofuels, the corn used is feed corn, a lousy crop for fuel but farmers have to learn that soon. A diversity of crops throughout the planet can help produce better fuels and better food. Smaller scale permaculture, the way African farmers once planted only even more efficient. And reversal of global warming. For more info,

http://www.alcoholcanbeagas.com?bid=2&aid=CD8&opt=

biggy June 4th, 2008 1:28 pm
I agree. Any government that is told by a foreign entity to destroy its food security and means of survival (even at the point of a barrel to the head) is not worth its salt.

It’s insane for one to accept an argument by a foreigner that ” you don’t need food security because we will supply or sell food when you are in need”. What about if they agree to sell you the food but at an exorbitant price you cannot afford or just outright refuse!

GottaGetOffTheGrid June 4th, 2008 1:51 pm
“the parastatal sector will continue to pose risks to the successful implementation of the 2002/03 budget. Government interventions in the food and other agricultural markets…crowd out more productive spending.”

translation: stop feeding your people, buy our guns.

EmptySet June 4th, 2008 3:57 pm
So it only took these geniuses 20 years to realize their policies didn’t work? Brilliant! Well, to keep getting paid for 20 years when your activities actively undermine your stated goals is brilliant, in a way.

CJM June 4th, 2008 4:56 pm
The problem is mentioned in the first paragraph, and has been around for as long as I have been aware of these things: The World Bank, International Monetary Fund (IMF), and the World Trade Organization (WTO).

They are amoral parasites. Get rid of them and the problem is solved.

FrederickJohnson June 4th, 2008 5:53 pm
None of this would be happening if only we’d replace corn with hemp. Hemp’s petroleum-free, doesn’t cause global warming, does not deplete the soil the way corn does, and can grow in any climate as was pointed out by another poster on another topic. Instead of attacking all biofuels which means letting the “right” win, let’s get down to the good vs. bad ones, ok?

FrederickJohnson June 4th, 2008 5:54 pm
By the way, why isn’t the Left calling for an ABOLITION of the IMF and the World Bank ? Big Government hasn’t been kind to the Left for 28 years, get it?

karlof1 June 4th, 2008 6:01 pm
“The problem is mentioned in the first paragraph, and has been around for as long as I have been aware of these things: The World Bank, International Monetary Fund (IMF), and the World Trade Organization (WTO).

“They are amoral parasites. Get rid of them and the problem is solved.”

Just getting rid of the institutions isn’t sufficient; we need to get rid of the people and mindset that instituted them in the first place.

abuelito June 4th, 2008 6:51 pm
Thanks Walden. Yeah is it ever a tough fight. I don’t know if the banks are stupid or just stubbornly ruthless as they wreck on Global Sputh country after another- it’s been going on for maybe fifty years now, and they still don’t get it.

see also Vandana Shiva

http://www.navdanya.org/earthdcracy/index.htm

MiMiCcS June 4th, 2008 8:04 pm
The banks serve the neo-malthusian elites who drive Globalizationa and free Trade, and whose agenda is population reduction in these eras. From Henry Kissingers NSSM 200 in 1974 until today. Africa and Latin America have been targets to suppress food production and population, and credit is issued to these countries with strings attached that achieve this. Those who do not go along get their economies attacked, such as Zimbabwe. Most of the civil wars are being funded by covert operations to this end as well.

America is the next target.

Chakra Khan June 4th, 2008 9:12 pm
Destroying Africa .period. is more like it

White folks just can’t deal with the fact that they are just really really light-skinned blackfolk themselves

shankari25 June 4th, 2008 9:21 pm
Didn’t South America get together to pay each other’s debt off? Why can’t Africa unite to boot out the bankers and looters? Why can’t they default altogether? They need to consider the needs of their people and kick everyone else out. If they need to copy medicine, then do it. That’s what Thailand did. There is currently an anti-Western group of emerging nations, Brazil, Russia, China, and India. Get with people who are concerned about things you are and boot the liars, cheats, colonialists out. Enough is enough. If Europe and the US won’t buy their stuff, then consider other markets. Europe and the US are on their way down. The emerging markets are the ones who will lead.

GwNorth June 4th, 2008 9:48 pm
All countries should defend zealously their own ability to grow food. If this through subsidies or tariffs then so be it.

If you can not feed your self you are at the mercy of those who will take everything you have in exchange for that food.

It is a Classic starve and Conquer approach and at the heart of Capitalism.

whatfools June 4th, 2008 11:39 pm
Is anyone surprised that the IMF and World Bank loan sharks have destroyed everyone in their path? This is the empire’s way of plunder.

lizard June 4th, 2008 11:59 pm
The problem isn’t capitalism or socialism, the problem is that people cheat and steal. The problem is the mind set that justifies this.The US and european governments are cheaters and thieves. Maybe every government would do the same if given the chance, but right now , the biggest problem is the US, a cheater and thief par excellence .

stilldreaming June 5th, 2008 1:50 pm
Africa’s population grew by A LOT since the 60’s. Child mortality dropped (thanks to western medicine) but many in Africa still have 7 or more kids per woman, with the woman often having no real choice of family size.

Don’t forget birth control (voluntary, provide education, option to purchase method of choice) as a solution to conquer famine.

Religion causes exponential population growth — how come articles like this do not even mention these root causes of famine?!

Even if corporations had not interfered, population growth ensures famine and environmental damage, followed by war over resources.

Andrew Taynton June 7th, 2008 4:36 am
stilldreaming

Despite the growth in the African population, it is the one continent that still has excess land that can be tilled.

Yes, a negative population growth is desirable, and the best way to achieve that is through education/schooling and improved living standards. We need to stop wasting money on wars and spend it where it in needed.

Religion is not necessarily the cause of large families, as a large family can bring security to parents in their old age if they have many children to contribute to their material needs if there is no guarenteed pension.

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Labels: AGRICULTURE, BIOFUELS, FARM SUBSIDIES, FERTILIZER, IMF, NEOLIBERALISM

posted by MrK @ 5:58 AM